The Second Circuit today affirmed the dismissal of indictments against 13 former partners and employees of KPMG, who were charged with criminal tax fraud and conspiracy. United States v. Stein, No. 07-3042-cr (2d Cir. Aug. 28, 2008):

We hold that KPMG’s adoption and enforcement of a policy under which it conditioned, capped and ultimately ceased advancing legal fees to defendants followed as a direct consequence of the government’s overwhelming influence, and that KPMG’s conduct therefore amounted to state action. We further hold that the government thus unjustifiably interfered with defendants’ relationship with counsel and their ability to mount a defense, in violation of the Sixth Amendment, and that the government did not cure the violation. Because no other remedy will return defendants to the status quo ante, we affirm the dismissal of the indictment as to all thirteen defendants.